CHAPTER 7: SEGMENTATION, TARGETING AND POSITIONING

Design a Customer - Driven Marketing Strategy

Targeting

Differentiation

Segmentation

Positioning

Divide the total market into smaller segments

Select the segment(s) to enter

Differentiate the market offering to create superior customer value

Position the market offering in the mind of target customers

Segmentation

Segmenting Business Market

Segmenting International Market

Segmenting consumer market

Grouping buyers based on needs, traits, behaviors that might require separate marketing strategies or mixes

Types

Psychographics

Geographic

Behavioral

Region of country

Provinces

Country

Cities

World region

Neighborhood

Population size

Demographics

Age & Life cycle

Household Income

Ethnic or Cultural group

Social class

Lifestyle

Personal characteristics

Occasion - based purchased

Benefits sought

User status

Usage rate

Loyalty status

Readiness stage

Purchase approaches

Situational factors

Operating characteristics

Personal characteristics

Economic factors

Political & legal factors

Geographic location

Cultural factors

Segment consumers who have similar needs & buying behavior even though locating in different countries

Based on their opinions, interests, emotions.

Attitude toward product

Based on different geographical units

The most popular bases (closely with consumers wants, needs, usage rates)

Based on consumers knowledge, attitudes, uses, responses to a product

Multiple segmentation

Identify better - defined target groups

A powerful tool for marketers of all kind

Buying behavior & benefits provide best basis

Overall economic development

Population's income levels

Stability of government

Monetary regulations

Receptivity to foreign firms

Bureaucracy

Religions

Values & attitudes

Common languages

Customs

Behavioral patterns

Requirements for Effective Segmentation

Substantial

Accessible

Differentiable

Measurable

Actionable

Certain segmentation variables are difficult to measure

The size, purchasing power, profiles can be measured

Effectively searched and reached

Should be the largest possible homogenous group pursuing with a tailored marketing program

Conceptually distinguishable

Respond differently to different marketing-mix elements and programs

Designed for attracting & serving the elements

Market Targeting

Select target market segments

Levels

Evaluate market segments

Structural attractiveness

Company objectives & resources

Size & growth

The largest, fastest-growing are not always the most attractiveness to every company

Some company may lack of skills and resources needed

Affect long-run segment attractiveness

Forces

New entrants

Competitors

Substitute products

Relative power of buyers

Power of suppliers

Unprofitable -> even take steps to encourage that group to shop at the competition

Mesh with company long-run objectives

Enter only which segments create superior customer value & gain advantages over competitors

Micromarketing

Consists of a set of buyers who share common needs or characteristics that the company decides to deserve

Undifferentiated Marketing (mass marketing)

Differentiated (Segmented) Marketing

Concentrated (Niched) Marketing

Focus on & target what is common in the needs of customers (whole market with 1 offer)

Ignore market segment differences

Trouble competing with more-focused firms (better satisfying the needs of specific segments and niches)

Increase the cost of doing business

Target several market segments & design separate offers for each

Extra marketing research, forecasting, sales analysis, promotion planning, channel management

The greater knowledge

Goes after a large share of one or a few segments or niches

Effectively

Consumer needs in niches it serves

Special reputation it acquires

Fine-tune products, prices, programs to the needs of carefully defined segment

Efficiently

Towards consumers can serve best and most profitability

Local

Tailors products and marketing programs to the needs of specific segments (local & individual marketing)

Individual

To whom live in the same city/ neighborhood/ shop in same store

Effective in the face of pronounced regional and local differences in demographics and lifestyle

Meet the needs of first-line customers

Drive up manufacturing and marketing cost by reducing economies of scale

Create logistics problems

To individual customers (mass customization)

Make relationship with customer more important than ever

Unlike mass production

Choosing a targeting strategy

Product life-cycle stage

Product variability

Market variability

Company resources

Competitors' marketing strategies

Differentiation & Concentration: products that vary in design

Undifferentiated marketing: uniform products (grapefruit or steel)

One version -> Undifferentiated/ Concentrated marketing

Mature stage: differentiated marketing

Competitors use differentiated/ concentrated -> undifferentiated can be suicidal

Competitors use undifferentiated -> gain advantage by differentiated/ concentrated

Socially responsible marketing

Social responsibility trumps profitability if efforts are seen as exploitative or irresponsible

Caution to be taken in target marketing

Target vulnerable or disadvantaged consumers with controversial or potentially harmful products

Marketing of adults products spills over into the children's segment (intentionally/ unintentionally)

Differentiation and Positioning

Strategy

Product Position

Place the product occupies in minds of consumers relative to competitors

Consumer perception of products

Perceptual positioning map

Show consumers perceptions of their brands versus competing products on important buying dimensions

Based upon 2 variables (price & quality)

Select competitive advantage(s) on which to create position

Identify competitive advantages

Develop a poisoning strategy

Understand customer needs better than competitors, then deliver more value

Points of differentiation can occur anywhere in the entire customer experience

People

Channels

Services

Product

Image

Features, performance, style, design

Consistency, durability, reliability, repairability

Speedy, convenient, cautious

Expedient, convenient, cautious

Ex: transactional banks

Coverage, expertise, performance

Hire & train better than competitors

Training, culture, morale

Distinctive intangible benefits

Multiple differences (Which differences)

One unique selling proposition (USP) - (How many differences to promote)

Important

Distinctive

Superior

Communicative

Pre-emptive

Affordable

Profitable

The difference delivers a highly valued benefit to targeted customer

Competitors do not offer difference

Company can offer it in more distinctive way

Competitors cannot easily copy the differences

Communicable & visible to buyers

A complex set of consumers perceptions, impressions, feelings compared with competing products

Demographics (industry, company size)